MAS mulls over need to tighten controls on illicit financial flows following Pandora Papers

SINGAPORE'S financial regulator is engaging financial institutions to assess if it is necessary to tighten controls on the illicit movement of money even though the Pandora Papers have not raised "significant concerns" on the Republic's controls, Finance Minister Lawrence Wong said in Parliament on Wednesday (Nov 3).

The Pandora Papers, a set of 11.9 million documents that in early October exposed the secret wealth of world leaders, billionaires and celebrities - have not raised significant concerns over the anti-money laundering (AML) and combatting of financing of terrorism (CFT) controls of Singapore's financial institutions, he said in response to MP questions.

The International Consortium of Investigative Journalists (ICIJ), which published the papers, had identified that 336 prominent individuals had established offshore structures to hold assets assisted by 14 service providers in at least 38 jurisdictions.

Two of the 14 service providers are foreign incorporated trust companies with subsidiaries in Singapore that are licensed and regulated by the Monetary Authority of Singapore (MAS).

"Based on MAS's assessment and information available thus far, the Pandora Papers have not raised significant concerns... over the AML/CFT controls of our financial institutions," Wong told the House.

"Nevertheless, MAS is engaging the relevant institutions to assess if tightening of controls is warranted," he added.

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Wong said both licensed trust companies were already under "intensified scrutiny" by MAS before they were named in the leaked documents.

One of them, Asiaciti Trust Singapore, was fined S$1.1 million in July last year by MAS for inadequate safeguards against money laundering and terrorism financing.

The other company, Trident Trust, was directed by MAS in September last year to remediate weaknesses detected in its risk assessment controls during the regulator's supervisory surveillance.

The ICIJ had acknowledged that there are legitimate reasons to set up offshore structures, such as for investment and estate management, Wong noted.

However, offshore structures often lack transparency and are thus vulnerable to abuse for illicit activities, he added.

This is why MAS has clear requirements for financial institutions in Singapore to identify and verify the identities of persons who are beneficial owners or effective controllers of their customer accounts.

The regulator also supervises financial institutions to ensure they have robust controls against money laundering and terrorism financing.

"As a major international financial centre, Singapore will always face the risk of illicit financial flows. What is important is that we supervise our financial institutions well and take strong enforcement actions when necessary to reduce this risk as much as possible," said Wong.